The opposition and ruling coalition in the National Assembly on Tuesday underscored the need for signing a "charter of economy" with a view to improving the deteriorating economic situation. Taking part in the debate on budget 2011-12, Khawaja Muhammad Asif of Pakistan Muslim League said that time has come to turn Pakistan from a "security state" into an economically viable country by achieving self-sufficiency and lessening dependence on foreign assistance.
This was in the realm of possibilities but the successive rulers had resorted to easy option of foreign assistance from the United State at the cost of sovereignty and self-respect. "Discard the security paradigm and initiate economic paradigm", Asif proposed vehemently to a thinly attended sitting of the Parliament. He said that the Finance Minister has failed to improve the performance of state-owned enterprises (SOEs) despite his commitment to the Parliament during the 2010-11 budget speech. Tax collection could not be improved due to leakages in the system whereas losses of most of the power distribution companies have considerably increased and the honest consumers are being penalised for loss-making companies. The PML-N leader said that this was unfortunate that premium on corruption and dishonesty has taken the country to the verge of a failed state.
Muttahida Quami Movement (MQM) and Pakistan Muslim League (N) were in unison over economic situation and Parliamentary leader of MQM Dr Farooq Sattar called for taking extraordinary measures by the political leadership in the form of "charter of economy" to save the country from economic collapse. "The economic deterioration has become a challenge for the survival and security of the country" and the situation warrants extraordinary measures to revive growth.
Farooq Sattar said the government was resorting to printing of notes to bridge a shortfall of Rs 1 trillion as a result of Rs 3.75 trillion expenditure and Rs 2.75 billion income through revenue collection. He said that printing of currency notes was a major reason for rising inflation in the country. The MQM has suggested a host of measures and by implanting those government can improve tax to GDP ratio by plugging leakages, ensuring maximum compliance, taxing all incomes. He said that the adoption of the proposed measures would increase tax to GDP ratio and minimise dependence on external sources as well as bank borrowing to finance the deficit. Farooq Sattar said that increase in exports to $24 billion dollars was not real growth and the country benefited from the rising prices of cotton and wheat in the international market. He said that his party has handed over to the official of Finance Ministry a set of proposals through which the government could increase GDP growth, bring down inflation, achieve real growth in exports and increase tax base by bringing all the income into the tax net.
Jahangir Khan Tareen of Pakistan Muslim League-Functional (PML-F) expressed complete dissatisfaction over Budget-11-12 and said that the government was not able to achieve major macro-economic targets of the out-going fiscal year.
He said that the targets set for the next fiscal year would remain elusive unless necessary measures are taken timely to fix the things on taxation side and losses of state-owned enterprises (SOEs). The government would not be able be reduce inflation and create employment opportunities without taking measures to increase the dwindling growth rate and to control rising fiscal deficit.
He said that missing of fiscal deficit target for the next fiscal year would mean more borrowings from the banking sector and high inflation in the country. He said that the government has set four percent of the GDP fiscal deficit target for 2011-12 and Rs 125 billion budget surplus by the provinces. Tareen said that overdraft of the provinces is already increasing. If the government did not take tough measures, the deficit might go over 5 percent of GDP for the next fiscal year.
About agriculture tax, he said that agriculturists are already paying tax. He said that the government collects Rs 44 billion from agriculture sector while Rs 35 billion of GST on fertilisers and Rs 7 billion on tractors. He said that the farmer was ready to pay agriculture tax but there should be clear mechanism for this purpose. Jahangir Tareen said that 80 percent tax should be expended in that district from where it is collected. He said that the government should not impose tax on farmers having less then 25 acres of land. He said that the government should impose tax on retailers and wholesalers and those who make their black money white through TT. He said that there was a provision in the law and the people legalise their black money with one percent through TT.
Jahangir Tareen said that unemployment was increasing in the country due to loadshedding as most of the small industries have been closed. "Lowest investment was made this year as compared to last 63 years in the country. I am not expecting better situation in near future and we should get together to improve economic situation of the country," He also said, "Kerry Lugar bill has become a disgrace. We should seek excuse form US to accept this bill."